Contributing Firms:
The Irish Tax Monitor November 2020
This Month's Roundtable

The Questions

Question 1:
In the new OECD BEPS Inclusive Framework, published the day before the Budget speech, the OECD says: “The proposals would reduce profit shifting and place a floor on tax competition, which would support the ongoing revenue needs of governments, particularly as they seek to rebuild their economies after the COVID-19 crisis.....the introduction of a minimum tax rate would lift the floor on the effective corporate tax rate paid by MNEs to an agreed minimum level”. Referring to the Framework Report, The Minister for Finance said in his Budget speech that it would be considered as part of the Department’s promised review of the Irish Government’s 2018 Corporation Tax Roadmap. In view of the Report, would you be confident that the Irish Government going forward could have a chance of winning an argument that that floor on tax competition can be set at 12.5 per cent, Ireland’s rate, which would, for Ireland, have the valuable side effect of copperfastening the often quoted Irish 12.5% rate as a global standard in the process? (A 12.5% rate is the rate that the OECD itself has used in its central case econometric simulations to quantify global corporation tax revenue forecasts of alternative scenarios).

(For Reference see here.)

(For more on this: the OECD webinar held on October 20th. (at the above link).

The Finance Bill 2021

Question 2: How would you assess and evaluate the main additional measures revealed in the Finance Bill 2021, and not signalled on Budget Day?

Question 3: Where have there been proverbial ‘missed opportunities’, in your estimation?

Question 4: VAT: e-commerce rules
The European Council has confirmed the postponement of the new VAT e-commerce rules until 1 July 2021, as earlier indicated by the Commission, on account of Covid -19. The future VAT rules for e-commerce are complex and will require careful consideration by companies affected. Given this postponement, what advice can companies avail of?

VAT: Question 5: Temporary reduction in the standard rate
As part of the July 2020 stimulus package, the Minister announced the introduction of a temporary reduction in the standard VAT rate from 23% to 21% with the new lower rate to remain in place for six months from 1 September 2020 until 28 February 2021. What advice can be taken by companies to maximise the value of this incentive?

Question 6: Intangible assets and intellectual property
The Minister announced that he is amending legislation to provide that all intangible assets acquired after October 13th will be fully within the scope of balancing charge rules. The renewal of the Knowledge Development Box was announced. How can these and other changes introduced in the Finance Bill be interpreted by firms who need to consider forward tax risk for IP assets?

Question 7:

On Oct. 6, the EU finance ministers comprising the Economic and Financial Affairs Council (ECOFIN) affirmed that it considers the Cayman Islands to be a fully cooperative jurisdiction for tax purposes by removing it from its Annex 1 list of non-cooperative jurisdictions (the Annex 1 list). This indicates the growing spirit of cooperation between jurisdictions of recent years, and has been widely welcomed e.g. in the alternative investment industry. Can you indicate what some of the practical consequences of this may be in the coming year ?

This Month's Roundtable - The Answers

A Finance Bill, and other critical issues

The Roundable this month examines in detail the Finance Bill, and matters arising in last month’s Budget speech, such as the signalled review signalled by Minister Paschal Donohoe of the Irish Government's 2018 Corporation Tax Roadmap. But it has been an important month also internationally, with the US heading towards a regime change that is certain to impact Irish-US corporation tax relationships, Cayman Islands coming off the Annex 1 List of the EU, and, in an important 155 page judicial review issued in the High Court, a judgement on the Perrigo-Tysabri case that brings important, home grown, issues to bear concerning the Irish corporation tax regime.

In This Month's Issue

Tysabri’ - a new chapter in the Irish tax canon

Tysabri’, and ‘Perrigo’ are words destined to become well known reference terms in the canon of Irish tax law, not so much on account only, of the Judgement this month in the High Court, on Perrigo’s €1.636bn tax case, but because it is destined to be adjudicated upon again, it seems likely, in the Supreme Court, and, in any case at the Tax Appeal Commission (TAC).

Analysis - Special Feature

Brexit: VAT and Transfer Pricing Impacts for Financial Services

The UK left the EU (European Union) Single Market and Customs Union on 31 January 2020. This means that the UK and EU must negotiate and agree the terms of their future relationship by the end of the transition period on 31 December 2020. At this point, fundamental changes will come into play and with increasing rhetoric emerging from both sides the chances of an agreement being reached remain uncertain. While legal and regulatory issues will be key drivers of change, tax considerations are important too and should not be overlooked. Financial Services and Insurance Businesses (FSIs) trading in, with, or through the UK now have only two months to plan and take action in preparation for a post-Brexit environment. In particular FSIs who have moved to Ireland as a result of Brexit readiness should consider in particular the associated VAT and transfer pricing impacts of such a move.